USA: +1 725-224-8795 
Sign in
The senior partner of Wojtysiak & Co., CPAs, has been approached by a small, publicly traded corporation wishing to change auditors. The Wojtysiak firm does not audit any other public companies. Because of the Sarbanes-Oxley Act of 2002, Mike Wojtysiak, the senior partner, needs to know the regulatory issues facing his firm if it accepts the new engagement.
Need Answer
Draft a report that outlines the Sarbanes-Oxley considerations for a firm such as the Wojtysiak firm. Locate the actual act (Public Law 107-204) the full act may be found at www.gpo.gov/fdsys/pkg/PLAW-107publ204/pdf/PLAW-107publ204.pdf
Expert Answer
It has been mentioned that Wojtysiak & Co., CPAs was not auditing any other public companies before being approached by the publicly traded corporation mentioned in the question. As per Section 102 (a) of the Sarbanes – Oxley Act of 2002 it is unlawful for any firm that is not a registered public accounting firm to prepare or issue, or to participate in the preparation or issuance of, any audit report with respect to any issuer. Hence Wojtysiak & Co., CPAs must get registered with Public Company Accounting Oversight Board (PCAOB) (“the Board”).
In order to get registered with PCAOB, the firm shall submit an application form as prescribed by PCAOB from time to time. The contents of the application should mention the following:
- Names of all issuers as defined in the Sarbanes Oxley Act for which the firm has prepared or issued audit reports in the immediately preceding calendar year and also mention name of those issuers for whom the firm expects to prepare report or issue report in current calendar year
- Fees that is received by the firm annually from each issuer for audit services, other accounting services and non-audit services
- Any other current information for the most recently completed fiscal year of the firm as requested by the Board
- The firm has to specify and submit a statement of the quality control policies for its accounting and auditing practices
- The list of all accountants associated with the firm who prepare or contribute in preparation of audit reports. License or certification number of each such accountant should be mentioned. The State license number of the firm also need to be mentioned.
- If any criminal, civil or administrative action or disciplinary proceeding is pending against the firm or any person associated with the firm in connection with any audit report, the same need to be also mentioned.
As per Section 129 (3), the application mentioned above should include consent executed by the firm to cooperate and comply with any request for testimony or production of documents made by PCAOB. Also an agreement to the secure and enforce consents as described above from the persons associated with the firm
The firm also needs to submit annual report to PCAOB or if required more frequent reports to update information contained in the application for registration or to provide such other information which the Board might require.
The firm will also be required to pay fees to the Board to recover the costs of processing and reviewing applications and annual reports.
The firm will need to comply with the auditing, ethics and related attestation standards prescribed by the firm to issue audit reports. The firm will require to comply with the mandatory rotation requirements as specified in Section 203 of the Sarbanes Oxley Act, 2002.
